There are businesses that spend all their money and resources on acquiring new customers, and there are ones that focus on retaining their existing customers as well. Growing your business by acquiring new customers exclusively is an expensive proposition.
Customer retention is a much better way to grow your business, as it opens new ways of new customer acquisition. Thus for smart businesses, it’s important to retain existing customers and increase their lifetime value (CLV).
There’s an old wisdom which dictates that it’s much cheaper to retain and delight an existing customer than to find a new one. Despite this, 44% of companies spend more resources on acquiring customers than they do on reducing churn.
In fact, only 16% of businesses focus on reducing churn.
However, like we said, the smart way to run a business is by increasing the customer lifetime value.
What is Customer Lifetime Value?
Put simply, customer lifetime value is the amount of net profit a company can make from one customer over time.
A company with a high CLV will obviously have higher profits because it makes a high profit on average per customer. This is an excellent way of judging a company’s value.
Using Email Marketing to Increase CLV
Any half-competent modern business will have an email list they use to send updates to customers, existing or new. Savvy businesses know that email lists can be used for much more than just to send updates – they can be used to build deep relationships and increase customer loyalty.
There are hundreds of ways to increase the average customer lifetime value (CLV) at your company, but let’s focus on how you can utilize email marketing for the same job.
Create Customer Segments
This goes without saying but personalization is key to great email marketing. You can’t send the same offer to customers with different buying habits or purchase histories.
To send personalized email messaging that resonates with your customers, create customer segments based on how profitable they’ve been. For example, you could create customer segments as follows:
- Non-profitable customers
- Profitable customers
- Very profitable customers
Of course, this is not the only way to segment customers. For some businesses, ‘non-profitable’ and ‘very profitable’ might be very vague terms when it comes to understanding customer profiles.
In that case, you can get more precise. You can create segments based on exact numbers, such as “customers who’ve spent under $1000 in a year” and so on.
The idea here is to laser target your customers with personalized offers.
The Welcome Email
Ever noticed how every business sends you a welcome email the moment you sign up for their services, or purchase a product? The reason behind this is simple – the business wants you to feel welcome.
Great welcome letters should make a lasting first impression on your customer/subscriber’s mind. Many customers don’t pay attention to these welcome emails because they look at the same and contain the same boring words.
So forget about playing it safe when it comes to welcome emails. Focus on hitting it out of the park by impressing the customer by a visually-impressive email. Pro-tip: Include a special offer for new members in your welcome email for easy CLV points!
According to Experian, welcome emails have transaction rates that are 9 times higher than mass emails.
Your customers will read welcome emails mostly after purchasing a product or signing up for your services. There’s perhaps no better time to target them, as they’ve already shown they’re willing to do business with you.
Let’s get this straight: you won’t write the perfect sales or marketing email on your first try. Getting messaging onpoint for emails takes time, experience and a lot of hit and miss.
The important thing is to create a process out of your email marketing campaigns and analyze what’s working and what’s not. Track your open and click rates, and see what subject lines seem to be working well.
When it comes to email marketing, subject lines can make a big difference. Changing a single word within a subject line can cause open rates to go up, so be careful how you describe your emails.
Optimize your email body to be as concise as possible while consistently delivering useful information. Remember, you’re sending an email and you’re asking customers to give valuable time to something that might not immediately benefit them.
Make your emails as crisp to read as possible. The more engaged your customers are with your emails, the more engaged they are with your brand as a whole.
Send Personalized Offers
Stay on top of your customer’s minds by periodically sending them personalized offers that are tailored specifically for them. This isn’t a hard job anymore. There are plenty of tools that will automate the whole process.
These emails are another way of saying that your brand remembers the customer and already knows what the customer wants to buy. This is powerful as the customer will feel a deeper connection to your brand.
Don’t Send Emails Without Purpose
This might seem a bit confusing, as you’d never imagine sending an email without purpose to your customers. However, many companies fall into the wormhole of sending meaningless emails to customers just to stay on top of their minds.
Yes, wishing happy holidays is fine but sending wishes for every possible holiday? That will just get you flagged for spam.
If you’re asking for feedback, make sure it’s feedback about something that matters to customers as well.
Using Emails to Increase CLV
Increasing customer lifetime value should be a top priority for every modern business. As ad costs keep growing, it becomes ever more expensive to acquire new customers. Thus, it is absolutely imperative for businesses to nurture their existing customer base.
Email is a great way of building a lasting relationship with customers. Just don’t forget to segment them first. The more you know about the type of customer you’re emailing, the more targeted and better your emails will be.